Company earnings help markets higher.

Company earnings in both the US and Europe helped stock markets finish mostly higher on Friday. US Durable Goods was the major headline economic news item for the day and the reading was weak overall but was not weak enough to see traders hit the sell button with any conviction. The technology heavy Nasdaq Index broke records again as traders cheered some strong tech stock earnings and buyers came for Microsoft buying it up by as much as 10%.

If you tried to pick a major theme for financial markets last week you’d likely struggle however there is more than enough news coming this week to give us something to talk about by the weeks end.

It appears the Greeks and European leaders made little progress on the debt and loan issues and this subject will no doubt simmer throughout the week with Greece due to pay some big bills next month and right now it has no money to make those payments.

LTG GoldRock Members can check this Morning's GoldRock Insider Report for the full run down on what will be happening in the markets this week and any upcoming Trades. 

$A lower and not expected to recover

$A lower and not expected to recover

Is One Kiwi Dollar about to be worth more than one Aussie?

We may have recently beaten the Kiwis (flogged them actually) in the Cricket World Cup Final but it’s the Kiwis who are winning the currency price race with one Kiwi Dollar now being worth the same as one Aussie Dollar.

This is the first time since June 1995 the AUDNZD has been this low.  It reached 1.0275 in June 1995 and since then has averaged around 1.2500 with a high of 1.3791 in March 2011. So why is the AUD dropping so far against the Kiwi Dollar? The answer is because the official cash rate at the RBNZ is 3.5% and the official cash rate at the RBA is 2.25% making a 1.25% interest rate differential between the two Central Banks. Graham Wheeler the RBNZ Governor won’t like the Kiwi overtaking the Aussie Dollar in value because it simply makes New Zealand less competitive on an international trade basis and with Australia being such an important export and tourism partner a high Kiwi Dollar is just not good for the Kiwi economy.

I am not sure too many Aussie’s will be able to bring themselves to go to New Zealand now $1 AUD ends up being worth less when they exchange it into Kiwi Dollars. Of course its great for Australian tourism and if you are worried about an influx of more Kiwis’ coming across the Tasman to live in Australia you should be. They are coming in droves now! 

650,000 Kiwi Citizens now live in Australia and the migration out of NZ to Australia has increased 40% in the last 10 years and is increasing every year. 650,000 Kiwis living in Australia is 12% of the NZ population. In comparison only 70,000 Aussies live in NZ, which is 0.03% of the Australian population.  With the AUDNZD now at parity and soon likely to be even lower the Government in New Zealand might just have to shut the exit door.